November 21, 2012 / 7:26 AM / 5 years ago

UPDATE 1-Japan's Kansai, Kyushu Elec to import 1 mln T U.S. coal

* Two firms to buy from Oxbow Coal

* U.S. coal a little cheaper than Australian variety

* Firms to consider extending purchase after first year

TOKYO, Nov 21 (Reuters) - Japanese utilities Kansai Electric Power Co and Kyushu Electric Power Co said they have agreed to jointly buy a total of 1 million tonnes of low-sulphur high quality U.S. coal at prices a little lower against a similar type from Australia.

Australia is traditionally the biggest thermal coal supplier to Japan. But given the shutdown of nuclear reactors in Japan for safety checks after last year’s Fukushima disaster, utilities have stepped up efforts to cut fuel procurement costs.

The contract, which was signed on Wednesday, runs for a year starting this month. Coal is to be bought on a free-on-board (FOB) basis.

The two companies, which were among the most nuclear-reliant utilities in Japan, also said at a joint news conference that they would consider extending the one-year contract with Florida-based Oxbow Coal & Petcoke, a wholly-owned subsidiary of Oxbow Carbon.

Kansai will take about 400,000 tonnes, while the remaining 600,000 tonnes will go to Kyushu Electric, both firms said. The coal, which is produced from Oxbow’s coal mines in the United States, will be shipped from the west coast of North America.

U.S. coal of 6,600 kcal/kg is to be imported from the contract and it would be a little lower than a typical Australian coal of 6,322 kcal/kg on a cost, insurance and freight (CIF) basis, helped by the scale merit of the joint purchase, a Kyushu Electric official said.

In 2011, Japan imported 532,793 tonnes of thermal coal from the United States, up 46.5 percent from a year earlier. But U.S. coal accounted for only 0.5 percent of total thermal coal imports of 101 million tonnes last year, with a two-thirds of the total from Australia and 20 percent from Indonesia.

Kansai Electric said it bought 3.87 million tonnes of thermal coal in the last business year ended March. About 71 percent of that came from Australia, with 23 percent from Indonesia, compared with only 150,000 tonnes from the United States.

Kyushu Electric said it bought 6.17 million tonnes in 2011/12, with 66 percent from Australia and 22 percent from Canada. It bought 70,000 tonnes of U.S. coal in 2011/12.

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